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What Happened To The Gold Correlation?
Submitted by Jim Quinn via The Burning Platform blog,
The correlation between gold and the national debt was clear for 13 years. It made perfect sense in a free market. You can’t print more gold. It is a relatively scarce metal that has represented wealth for centuries. Fiat currency can be printed at will by corrupt bankers and politicians. Every paper currency ever created eventually reached its intrinsic value of ZERO, as human beings always take the easy way in attempting to create wealth.
So what happened in 2013? The national debt has gone from $16.5 trillion to $18 trillion, but the price of gold has dropped from $1,750 to $1,200. Is gold no longer a store of value? Is creating $2.5 billion per day in new debt now the path to long term prosperity and wealth accumulation? If gold is no longer insurance against the corrupt machinations of bankers and politicians, then why are China and Russia accumulating as much physical gold as they can get their hands on?
There seems to be only one logical explanation for the abrupt break in the correlation between gold and the national debt. The free market has been manipulated to artificially suppress the price of gold. A rising gold price reveals the inflationary monetary policies of the Fed and the outrageous spending of politicians. The Fed and their owners on Wall Street, with the approval of their captured political hacks in D.C., are using the paper markets, derivatives, and lack of market transparency to keep the price of gold from rising.
The bankers are winning for now. Can they suppress the price of gold forever? Can they prop up the stock market forever? Does history provide even one example of a fiat currency that did not ultimately reach its true intrinsic value?
Are you going to bet on Grandma Yellen or gold?
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We correlated some folks
You know, that line never gets old, so versataile
Warning: statist troll avalanche below.
You didn't manipulate that...
Decoupling by mechanical means?
I meant machinations!
I meant Machiavellian!
Deus ex Machina?
I love lamp
We decoupled some folks.
What happened? Simple:
And The Lord Obama spoke. He said, "Let there be de facto price controls."
And there were de facto price controls.
Pay up suckers!!!
What happened? TPTB spent who knows how much money to keep gold where it is.
Gold is being manipulated. This is just another instance of reality not conforming to the desired narrative, so reality gets manipulated. Instead of giving in, TPTB double down again and pressure continues to build. Instead of a run of the mill recession in 2002, after over 12 years of denial, we now face an historic collapse when the edifice finally gives way.
This is not news to most here at ZH. Seriously? Is there nothing else going on in the financial world today?
Hugh, how's the collective been treating ya?
Obama spoke?
Find out who is running this world. The same people that give Obama his marching orders.
Wake up.
What happened? We can all guess but there is some strong circumstantial evidence.
When did it happen? April 10, 2013. No circumstantial evidence needed.
You called?
All Iknow is I really enjoyed buying Silver at $14.57 last night. I kind of wish I had bought more but being the greedy capitalist tht I am, I want to save some fiat in case they want to let have some at say $12 for Christmas. Thank you Wall Street !
I saw it at 14.80. I went to the Provident site andthe whole mf'er was sold out except for junk silver and bb's.
Don't dis the junk silver! Do you think PM's care which 'keryn' they're in?
Honey badger don't care...neither does silver or gold.
You forgot the "sark" tag. The first guy to use that gag was a comedian, everyone who used it since is an idiot.
As you get closer to the singularity, all correlations eventually break down.
"It is a relatively scarce metal that has represented wealth for centuries." -- from the article
Is gold a currency? Sure can be.
Is gold money? Sure is.
The key is in the sentence above - gold is primarily a wealth reserve asset, i.e., savings. No different than owning a valuable, rare painting or a good piece of property except that it's a) universally recognized, b) divisible (unlike a painting), and c) easily marketable.
They say "you can't eat it", but it sure as hell will get you laid (and then you can think about breakfast).
It's mucho importante to keep a sense of perspective! :>D
Me thinks it has more with GERMANY wanting it's GOLD back than many realise.
Dupe!
If you like your Gold Correlation, you can keep your Gold Correlation.
The first guy to use that gag was a wit. Everybody who still uses it, is a half wit.
"Better a witty fool than a foolish wit!" -- Shakespeare
... yeah, OR: it's still funny, and versatile enough to be funny in a variety of different conversations.
How about another logical explanation: the correlation was spurious to begin with.
ROME wouldn't have had a problem if they discovered a way to short unlimited amounts of Gold and Silver. - Keynes told me.
+1 the correlation between the gold price and the size of kim kardashian's butt is broken too.
Thanks Buzzy...didn't know KK's butt size was a variable in this equation
where do you think they came up with the cup and handle followed by the double top?
similar to the pump and bump
booty?
You may have to change your name to "Stopped Out"
6,000 years of correlation versus 1 year, 7 months and 21 days of outrageous manipulation?
History doesn't repeat, but it does rhyme...
Fill your pockets with Clown Bucks toilet tissue paper then, you epic Bozo.
When will the government bubble pop?
OR, the national debt is about to level off or (gasp!) decline.
Yo Dude(tte), pass that reefer around!
http://www.goldsqueeze.com/analysis/its-different-this-time
It's gonna get ugly
Optimist.
Nice. Thanks for the post...
SIMPLE: there is no Gold Correlation
Hammer + satanic monkey.
why spend a dollar today on an item that will be confiscated in a few years for fifty cents?
Let them try. Only if one is stupid enough to give it to them.
Tragic boating accident... In Costa Rica.
Dunno officer, it's underwater somewhere. Maybe it's close to that nuclear bomb the Air Force lost off the coast of Savannah, GA. Good luck, gentlemen, I sure would like to have the gold back.
Sorry officer I traded it long ago along with my guns and ammo for EBT cards.
And how exactly has that worked out in the past? LOL! Confiscate what exactly?
Remember, when fraud is the status quo, possession is 100% of the law.
This applies to absolute possession only... in your hands or inside the mattress. It doesn't apply to broker or agency "safekeeping" possession in their "safety" vaults.
No shit. Thanks Captain obvious.
Get long sharecropping and a dependable tribe. You will need them to insure possession.
Because 7.62x51.
That's good math...
Confiscation? That would be very interesting to see...how would they go about doing that?
It's one thing to write a law, it's quite another to actually enforce it.
Ok, I could see how TPTB might be able to trace the records of gold sales, but that only works for those sales that there ARE records for.
What about me? None of my PM's have any records of sale, as I buy privately. Yet I'll bet I have more than many buyers who bought their gold 'officially'...
I'm also sure I'm not alone.
So, maybe they'll pass a law forbidding me to sell it...again, how would they stop me? If I don't buy officially, what makes anyone think I'd sell officially? Or at all?
I buy because I do not trust fiat, especially now. So the "price" of gold, as expressed in fiat, will NOT lure me into selling. Why would I exchange something of value for even more of something worthless?
No, the only way to confiscate all that privately-held gold would be to go door-to-door, and search homes.
Not going to happen. And any leader that tried would be toast. It would be a logistical and PR mightmare, and would end so badly that would blow the hair back on the administration that attempted it.
It would also send the gold price through the roof, because the mask would be torn off. The whole meme with gold today is that it is a worthless relic...Confiscation would prove that to be a lie, and demand would soar. It would be a race between people and the confiscating government, to scoop up the gold first.
Now imagine that DID happen...and then imagine Russia or China decided to introduce a gold-backed currency at the same time...The desperation of our central bankers to get their hands on the peoples gold would be matched only by the desperation of the people to keep it out of their hands. In short, a real shit-show, with real bullets flying from both directions.
And our vaunted military would not be as useful as many believe. Sure, we have nukes and such, but so do Russia and China, and several others who have no love for us. Anyone who thinks those two would NOT get together to keep us in check is not thinking at all.
We'll be 'quarantined' here on our little isolated continent, and patrolling Chinese and Russian warships and jets would make sure we stayed here.
China and Russia do have their serious issues, but I would bet folding money that they'd put that aside to deal with US if they had to.
If it ever got to outright confiscation attempts, all bets would be off, and you'd know the end was imminent. It would be a truly desperate, last-ditch effort to hang on to control.
The average American will not care about gold holders after articles like "Gold Hoarders are Destroying the World's Financial Markets" start appearing. We know most Americans do not question reality or the news they are programmed with. I believe most would remain silent as doors get kicked in. They will rationalize as, "Wow, these people must be criminals if they're breaking down doors at 3am. I am so glad I didn't listen to my crazy Uncle who said to buy! I was right all along."
Yeah. You are right. The average American uses only prescription drugs and the Illegal Drug Trade is not 1/5th of the US Economy. (Yes. It is that much.)
Then you ask yourself why there is a push for legalization of the most common abused substances, Marijuana. It is the TAX REVENUES off a substantial portion of Economic Activity which the State Governments are after.
Yeah. The Drug War and propaganda about drugs has worked out so well. You are right. I need to abandon Gold and Silver immediately...right?
DO NOT HOLD YOUR BREATH.
Greed is so much more addictive than any illegal drug. And, trust me.
When they start with those types of headlines the World's economies will already be destoyed. Most will act as if it is every man for himself.
Hmmm...It is not too much different than today.
The government will never be allowed to legalize drugs for taxes as long as the shadow government (CIA) is making all the profits off illegal drugs.
Just keep stacking and kill the beast. Get your money out of their fiat system. Don't play the bankster game because you'll lose.
Some smart person here at ZH or at KWN said that when we see strange $50-100 dollar swings in gold and dollar jumps in silver, then the great rest will be getting close.
I did notice the GSR of 77.77 late last night and had to laugh. Talk about strange.
That quote is from "Another"
But that was only after the CBs start gobbling up all the gold!
Oh wait
Link for the new folks here...
http://fofoa.blogspot.com/
It might be the fall in yen (zerohedge alluded to this before). As the yen falls the dollar goes stronger, which makes gold go down in price. The sharade will end once Japan collapses under its misguided hyperinflationary policies which will trickle to the world economy
After Japan hyperinflates the US follows a bit later.
Nice bounce back from the carnage this weekend in PM
IF YOU LIKE YOUR CORRELATION, YOU CAN KEEP IT
In 2011 Central Bankers and their client banks made a big blind faith bet that this would all magically be over by now, instead of much worse.
The corrupt bankers and politicians or physical precious metals? Easy choice...
http://olduvai.ca
Wrong question, look at the chart
What will Happenen To The Gold Correlation?It wil correlate again
Just like it did 2006\2007 and in 2008\2009
Moral Hazard, period. This is what happens when you make "rules" that no one follows. What is my property and assets worth you ask? Whatever the fuck I say it's worth motherfucker.
Mark to fantasy forever!!!
"winning"
A big -1 goes out to TalkToLind for not puchasing any physical silver last night. Guess I'll have to wait for the next smackdown which doesn't worry me much; some sovereign nation will seek to repatriate its gold any minute now.
Silver will see $9. Gold will see $1000 in the near future.
I am not writing not to buy it at today's price. Gold is a bargain at any price as the US Dollar is trash.
Silver may be the better bargain if, and only if, the US chooses the Hyperinflationary Depression. Silver performs extremely poor in Deflationary Depressions. In fact the US Government had to purchase Silver in that 1930's Deflationary Depression at the price fell to $0.25 per troy ounce. That price threatened the monetary metal backing of the coinage of that era as you could take 1/5th ounce of Silver (in a Silver Quarter) and trade that for One Ounce of Fine Silver.
But do not get disheartened when the Price Decline happens. It must happen. Hell, as a buyer, I always look forward for Price Declines as I like to buy when it is on sale. But I am just trading Monopoly Money anyway.
But it must happen as Deflation precedes a Hyperinflation. And Deflations also follow Hyperinflations. After the Hyperinflation destroys the currency then a Deflation also follows.
Gold does well in both deflations and hyperinflations. Of course it performs much better in a hyperinflation. But its VALUE appreciates in both.
VALUE MEANS UTILITY. Gold is an INDUSTRIAL METAL. It serves the Banking and Financial INDUSTRIES. The value, or utility, of Gold is it acts as MONEY and has Worldwide PURCHASING POWER. It is accepted as payment WORLDWIDE, GLOBALLY. In any depression Gold, and Gold alone, retains that utility over and above that of any other barter. That quality is what pisses these fraudulent banksters off the most.
Use Gold as a store of base wealth. Silver is much more speculative.
Bought gold at 1181 spot around Friday, dismayed that it dropped well below that after the Swiss Referendum no vote which I expected, but this morning's "recovery" is more consistent with my theory ( I am no financial expert of accountant etc) that the naked shorts are having less and less of an impact, and that like QE infinity, that too is going to have less and less of an effect.
I am sure I'll feel much better about my purchase when the physical arrives, and after these increasing commissions tacked onto the price of spot by APMEX, and gold has " recovered "to the point that my commissions costs are also recovered. But no matter, I made the purchase as a sort of long term last ditch armagendon survival stash, never to be used by my family unless the fiat money currency scheme totally collapses.
Also in view of bank's declaration that deposits will be subordinated to other debt instruments, I asked my self: Now where do I feel safer parking my money? In a Wells Fargo savings account or physical gold?
Wasn't thinking like this 5 years ago.
You make too much sense....!!
I, too, am buying physical with NO intention of selling it or using it. Purely a hedge against a collapse.
Here's the AU future $50 overnight tear. See the 5Hour chart:
http://www.investing.com/commodities/gold-advanced-chart
The 'invention' of all forms of paper commodity derivatives let the powers that be fully manipulate all markets.
yes, which works only as long as nobody tries to cash in those derivative bets...
good luck with that.
I think it is Russia nd China manipulating the markets ..so they can soak it all up and they are trying to..they have corrupt computers too...India just opened the spigots again....so that should get demand over heated once more.....delivery is the key now...not paper PMs....contries are finding that out...that is why the bring our gold home stories....more will come to that conclusion as rumors abound of shortages of physical metal at the exchanges....and that is coming too
Once all the physical is gone China and Russia can play the COMEX and buy all the contracts and demand delivery.
LOL. Watch the COMEX shut down.
PRISONERS DILEMMA. Can the Central Banks TRUST one another to do the right thing and try and walk the fine line of stimulating "growth" while still playing within the four squares of the sandbox. No they can't and what has happened is that everyone knows that everyone know that not only will they not show restraint, but they will lie and deceive, not just to the public but to one another. This was always unsustainable in the long run, but once trust is lost among thieves, things get interesting.
Great analysis. If we didn't realize it before, we got it in the face with the LIBOR scandals. The banks realized in 2007 and 2008 that they could not rely on other banks' disclosures and financial statements. There truly is no honor among thieves.
Make your X axis longer.
Gonna need a bigger y axis while you're at it..
If he's taking suggestions: change the title's purple color to orange.
To be controlled, nature must first be obeyed.
Gravity always wins in the end.
No, they can't do it forever.
The argument is that it must be a conspiracy. That's it - no facts. Tyler Durden, your standards are slipping.
I'll give you a fact; The manipulative plunge in the spring of 2013, and every over night attack since! FACT!
easy explanation. it has finally been realized that fiat is better than gold so gold will eventually go to zero as more people realize debt doesn't matter to fiat currency and any holes in the economy can literally be papered over. this is the new fed created financial fiat utopia.
The conspirators plan is having the intended effect: No matter where I go, Denny's, McDonald's, Arby's, or the even the local flea market, *everybody* is talking about how a low gold price means the "monetary policies of the Fed and the outrageous spending of politicians" doesn't seem to be having an effect on inflation.
EVERY BODY IS A FOOL!
The majority is never right. Never, I tell you! That’s one of these lies in society that no free and intelligent man can ever help rebelling against. Who are the people that make up the biggest proportion of the population — the intelligent ones or the fools? I think we can agree it’s the fools, no matter where you go in this world, it’s the fools that form the overwhelming majority.
– Henrik Ibsen (1828-1906) Norwegian playwright, theatre director, and poet
Turned out to be tungsten with a spray tan, so I chucked it in the river. Never again.
The supply of PAPER GOLD went ballsitic in 2013 - thats what happened.
Correlation is not causation. This was a mostly false correlation. Plot gold against commodities since 2011 - there's the correleation. Eventually gold will diverge from the commodity deflation trend - when monetary fear (inflation or crisis) asserts its influence.
As a guy who enjoys mouthing off, but doesn't have the time for fact checking, I've been looking at one version or another of this chart for two years now and wondering how gold looks plotted against the amount of money times its **velocity*.
I suspect that if you factor in the velocity of that newly printed money, you may yet find your correlation intact.
The Swiss kind of fucked us but many of us knew that.
The decoupling of gold and debt began in 2011 not 2013 and we have now been in a PM bear market for for 3 years. The true price of gold had it continued to parallel rising debt levels- should be around 2200.
I have wriiten about this on my blog as well.
I was trying to explain to my father that the only explanation for this was intervention by the Plunge Protection Team- Reagans Frankenstein- the Presidents Working Group on Financial Markets. He got so fucking mad that I would blame Reagan for this manipulation and distortion that I thought he was gonna have an aneurysm on the spot.
The Swiss screwed themselves; and in time they will understand!
The Swiss screwed themselves; and in time they will understand! Starting this morning it looks like!
Who wouldn't be mad when your explanation is associated with your pen name as well as your brain.
All this manipulation will end when producer nations demands to be paid with something of value instead of credit (currencies). Credit cannot expand indefinitely.
If you want to know where the recent disconnect in metals started... that is, the most recent, as banks and sovereigns have been manipulating PMs forever ( take for example, the denarius, which plunged from a high of 98 % at the height of the Roman Empire, to a low of .02% by the time of the fall) you would have to go back to September of 2011. The COMEX hiked margin rates, I believe it was five times in two days, while paper was dumped on the market in thin trading crashing through stops. I took a real beating overnight, I won't say how much other than that it was epic, as I was way overextended, and had completely underestimated the criminal nature of the market.
Every body underestimated the criminal nature of the Fed and Central Banks
differen ways of debasing the value of the token of exchange, certainly, but fiat is a much more dangerous animal.
http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Denarius.html
Mathematically inevitable, anyway, the name of the game is to use increasing wealth disparity to allow banks and the super wealthy to buy up more real assets - which do not include anything debt-based, as I use the term.
I'd love to see a chart of interest payments on debt as a percentage of tax revenue.
To what extent is the US government selling bonds just to pay interest on extant debt?
fwlimbw - I don't believe for a moment that the US will ever pay the entirety of the public debt, but naturally part of keeping this charade going is making ongoing interest payments.
I'm pretty sure we crossed into "borrowing to pay the minimum due" territory a few years ago, but to the extent true, you'd expect that this translates into an acceleratingly large amount of debt carry, requiring much more debt, requiring much more artificial demand to prop up treasuries, requiring much more QE - no matter what they call it.
It's a bit worse than the chart indicates. Gold is at about $1,200, not $1,300.
I'm long gold and PMs but honestly "Grandma Yellen" may have another 5-10yrs before she implodes; unless a black swan event happens soon
MANIPULATION.
pure and simple.
i'm not school smart in economics, or finance, but what scared me over the last 24 hrs., is the corralation when gold tanked, the nikkei took off, and now gold reversed, and nikkei, not the only green but one of the very few.
could they be a nervous gold population, read last week japenese gold purchases were taking off, did they spook early, or is japan, (boj), BIS's paper gold market?
Just found out 99% of Aus physical gold is kept in London, brokers routinely show customers the same ingots stored in their vault when they want to see it (true shit) My question is if SHTF who gets their gold when it has been sold/leased by more than what actually exists in reality?
I think some/all of us little guys may get screwed...
--Mommy, mommy I want a minature unicorn that talks and will do my homework.... huhhh huhhh....kan i, kan i, please mommy.
--Ok son, but first you have to finish your economics undergrad degree....now be a good big boy and eat your oatmeal.